Cape Town steps up Eskom exit plan as cheaper solar power deals take shape

Cape Town is taking significant steps to decrease its dependence on Eskom, with the city signing its first two long-term power purchase agreements with independent solar producers. These 20-year agreements will supply 70MW of electricity, with 30MW coming from a JEMPEC solar plant in Atlantis and another 40MW from Make A Difference LLC in Philippi.

The City stated that this electricity will initially cost 19% to 21% less than the current Eskom rates. These agreements are part of a broader plan to procure up to 200MW, with Cape Town ultimately aiming to buy as much as 700MW of independent electricity over time. Mayor Geordin Hill-Lewis emphasized the goal of reducing Eskom's impact on Cape Town consumers by making electricity more affordable.

The City expects to spend around R8 billion on electricity through these two agreements over the next 20 years, with future price increases linked to the Consumer Price Index instead of Eskom tariff increases. While the immediate savings are significant, Prof Vally Padayachee highlighted the importance of price certainty in the long run.

However, Padayachee cautioned that individual households may not see an immediate reduction in their electricity bills, depending on how the cheaper electricity is incorporated into the City's overall tariff. The City aims to lay the foundation for a more sustainable and scalable generation program with these initial power purchases, supported by a new procurement framework for independent power.

Cape Town is also planning a utility-scale solar project in Atlantis and a larger solar PV development at Paardevlei, investing more than R4 billion in grid infrastructure upgrades. Additionally, the City recently opened another front in its move away from Eskom dependence by inviting bids for waste-to-energy producers, aiming to procure at least 5MW through agreements of up to 20 years with electricity prices below Eskom's equivalent tariff.